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New-home sales rise in November, obscured by large downgrade
New-home sales rose 12.4 percent in November to 744,000 annualized units, while prior months saw a downward revision of 127,000 units. Compared to last year, November sales were 14 percent lower. NAFCU Chief Economist and Vice President of Research Curt Long analyzes the data in the latest Macro Data Flash report.
“New home sales rose solidly in November, but those gains were obscured by a combined 127,000 unit downgrade to prior month sales,” said Long. “This is the second consecutive month that the Census Bureau has made steep downward revisions to prior months, and the trend now looks much flatter as a result.”
November sales rose in three Census regions with the West rising 53.2 percent, followed by the Northeast (+15.6 percent), and the South (+2.7 percent). The Midwest region fell 25.4 percent on the month.
Based on current month sales, there were roughly 6.5 months of supply in November, down by 0.6 months compared to October. Unsold homes left on the market increased by 7,000 homes to 402,000 in November, representing a 39 percent increase from year-ago inventory levels.
“Homebuilder sentiment continued to climb through the end of the year and now sits at its highest level since February,” noted Long. “A potential rise in mortgage rates is a risk, but demand is strong and homebuilders hold all the cards in a market so short on supply.”
Of note, the median home price, non-seasonally adjusted, rose by 2 percent in November to $416,900, which is 18.8 percent higher than last year.
“The iShares US Home Construction ETF is up over 80 percent from two years ago. There is plenty of scope for more construction, but ongoing material delays plus builders' focus on the highest-yielding projects is preventing more needed supply from coming to market,” concluded Long. “The housing market in 2022 is unlikely to be fazed by Omicron or rate changes and should show steady sales gains with more above-trend price growth.”
For more economic updates from NAFCU's award-winning research team, view all of NAFCU's Macro Data Flash reports.